Daily Market Bulletin – 31 January 2022

Market Developments

Sentiment seems at a good place, as a volatile month draws to an end, despite slowing factory activity in China and persistent geopolitical tensions.

Sunday's data showed that the official Manufacturing PMI in China was 50.1 in January, lower than prior month's 50.3 reading, albeit above the 50 mark that indicates growth.

Middle East jitters persisted, as the United Arab Emirates announced today the interception and destruction of another ballistic missile against the country, as per the Emirates News Agency. [1]

On a BBC interview yesterday, NATO Secretary General Jens Stoltenberg said that "We have no plans to deploy NATO combat troops to Ukraine" if Russia invades. [2]

Atlanta Fed President Raphael Bostic did not rule out a 50 bps rate hike if needed, on a Financial Times interview over the weekend [3]. Mr Bostic is not a voter this year.

Bank of Canada Governor Tiff Macklem said that he is not comfortable with where inflation is and that "Interest rates very clearly have to go up to dampen spending and bring demand in line with supply" in an Interview with The Globe and Mail. [4]

Main Asia-Pacific stock markets were somewhat mixed, with mainland China out and Honk Kong closing early, while European futures point to the upside.

The US Dollar and the JPY Basket retreat, whereas main Commodity Currencies (CAD, AUD, NZD) rise against both.

Instruments Snapshot

EUR/USD is upbeat and retakes 1.1150, following last week's slump.

GBP/USD starts the week on the offensive, past 1.3400.

USD/JPY trades with positive undertone, but is still unable to leave 115.50 behind it.

USD/CAD drops towards 1.2700 on USD weakness.

AUD/USD attracts buyers and moves towards 0.7050.

NZD/USD rebound above 0.6550, following last week's plunge to the lowest level since September 2020 (0.6528).

GER30 trades with positive undertone, testing 15,500.

US30 rises above 34,700, but heads towards the end of a bad month.

USOIL is constructive below Friday's multi-year highs (88.85).

XAU/USD is on the back foot, trying to hold 1,785.

Economic Calendar Picks (GMT)

Market participants await Q4 GDP from Eurozone (10:00) and preliminary CPI Inflation from Germany (13:00).

Tuesday begins with Australia in the spotlight, as the country's central bank (RBA) hands down its monetary policy decision (03:30), with investors looking to see if it is ready to reduce/end its asset purchase program.

Mainland China stock markets will remain closed for the rest of the week and Hong King will return on Friday, due to the Lunar New Year.

See the economic calendar here.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 31 Jan 2022 https://www.wam.ae/en/details/1395303016284

2

Retrieved 31 Jan 2022 https://twitter.com/BBCPolitics/status/1487721140407705603

3

Retrieved 31 Jan 2022 https://www.ft.com/content/5f6fae25-de70-4977-aeb7-271fa3af5bc3

4

Retrieved 25 Jun 2022 https://www.theglobeandmail.com/business/article-tiff-macklem-would-like-you-to-know-that-he-doesnt-like-inflation/

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